Correlation Between First Trust and Knife River
Can any of the company-specific risk be diversified away by investing in both First Trust and Knife River at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Trust and Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Knife River, you can compare the effects of market volatilities on First Trust and Knife River and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Trust with a short position of Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Knife River.
Diversification Opportunities for First Trust and Knife River
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Knife is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and First Trust is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Trust Exchange Traded are associated (or correlated) with Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of First Trust i.e., First Trust and Knife River go up and down completely randomly.
Pair Corralation between First Trust and Knife River
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.11 times more return on investment than Knife River. However, First Trust Exchange Traded is 9.21 times less risky than Knife River. It trades about 0.01 of its potential returns per unit of risk. Knife River is currently generating about -0.14 per unit of risk. If you would invest 3,765 in First Trust Exchange Traded on November 27, 2024 and sell it today you would earn a total of 2.00 from holding First Trust Exchange Traded or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Knife River
Performance |
| Timeline |
| First Trust Exchange |
| Knife River |
First Trust and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Knife River
The main advantage of trading using opposite First Trust and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Knife River can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Knife River will offset losses from the drop in Knife River's long position.| First Trust vs. First Trust Exchange | First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest |
| Knife River vs. Franklin Street Properties | Knife River vs. NL Industries | Knife River vs. Eddy Smart Home | Knife River vs. Alto Ingredients |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |